PureGold Mining has raised $31 million in financing to help with the turnaround plans at its struggling Red Lake mine.
Mark O’Dea, interim company president-CEO, said in a news release that the financing gives them “the runway it needs to bring stability to our operation and establish a profitable mining business in Canada.”
The money was raised through a private placement offering that closed May 25. AngloGold Ashanti, already the company’s largest shareholder, increased its stake in the Vancouver company to 19.2 per cent.
The struggling underground operation entered commercial production last August on the site of the former Madsen Mine, but in the year-end financial statement, Pure Gold recorded a $34.9-million loss.
This past April, the company reported it had been falling short in reaching its gold production targets, especially on the high-grade ore side, blaming it on underground mine construction delays, bad scheduling, “insufficient geological information” for the stopes about to be mined, equipment issues, and “strategic misalignments. There has also been some shuffling in management.
The funding is earmarked to get the mine ramped up to a mining rate of 800 tonnes per day.
An updated gold resource and reserve is due out by year’s end, along with a new life-of-mine plan.
“With a large, high-grade resource base, a strong and improving geological understanding of the deposit, significant opportunity for growth, and a talented new operating team at the helm, we are excited and committed to driving PureGold forward,” added O’Dea.
The company has aggressively set about to cut costs by 30 per cent that includes cutting the number of people and the amount of equipment on site. They’ve reduce the number of drill rigs from four to two and better synced up their infill drilling program to better coincide with high-grade areas of the mine they want to see near-term production.
Pure Gold hopes these improvements will results in free cash flow toward the later stages of this year.